Tuesday, April 20, 2021

Carlyle Exits Ithaca Holdings

Korea Bizwire reported:

Hybe, the company behind K-pop phenomenons BTS, announced Friday a deal to buy a 100 percent stake in American music entrepreneur Scooter Braun’s Ithaca Holdings.

Under the deal, Hybe — formerly Big Hit Entertainment — will be acquiring the media company, which owns affiliates like SB Projects, founded by Ithaca chief executive Scott “Scooter” Braun and Big Machine Label Group, the company said in a statement.

In a separate regulatory filing, the company said it plans to buy the 100 percent stake in Ithaca Holdings for US$1.05 billion via its U.S. subsidiary Big Hit America Inc. The company will fund Big Hit America for the deal, which will increase its capital by 1.07 trillion won.

The Carlyle Group invested in Ithaca Holdings in 2017.  Carlyle's minority stake gave the private equity underwriter (PEU) a voice in Ithaca's secret purchase of Taylor Swift's music catalog.  

Carlyle co-founder David Rubenstein and co-CEOs Glenn Youngkin and Kewsong Lee ignored Taylor Swift's plea for help in acquiring the rights to her music from Ithaca.  She fired a shot over the PEU bow with her song "The Man."

Ithaca floated a Taylor Swift live album that bombed without the singer's endorsement  That motivated Ithaca and Carlyle to flip Taylor's music collection before she could begin re-recording her old music  

The PEU did not give Swift a chance to bid on her music, instead requiring buyer Shamrock Holdings to not communicate with Taylor until the deal was consummated. 

Taylor recently re-released her album Fearless and asked her loyal fans to bury the old versions of her songs on Spotify.  Swift's Fearless broke a record held by The Beatles for fifty four yeas.

Taylor has topped the Fab Four by making chart history with the re-release of "Fearless." Here's the chart history part ... the album hit #1 Friday in the UK, and with that Taylor has racked up 3, number-1 albums in 259 days. The albums ... "Fearless," "Folklore" and "Evermore." The Beatles hit #1 with 3 albums in a row, but it took them 364 days.

The Carlyle Group's investment in Ithaca Holdings is not clear

As part of the transaction, private equity firm The Carlyle Group is exiting its significant minority stake in Ithaca after initially investing in the company in 2017 by way of its Carlyle Partners VI fund.

Carlyle reported in June 2019:

The Carlyle Group, which initially invested in Ithaca in 2017, is supporting the (Big Machine) transaction, alongside Scooter Braun and Ithaca Holdings, through an additional equity investment by way of its Carlyle Partners VI fund. Carlyle will remain a minority shareholder in Ithaca and continue to support the combined company’s growth strategy with Jay Sammons, Head of Carlyle’s Global Consumer, Media and Retail team, remaining on Ithaca’s Board.

Business Insider reported:

Carlyle's involvement in Braun's $300 million deal to buy Big Machine is complex, but at the time the deal was announced, the group said it was "supporting" Braun, and his company Ithaca Holdings, in their purchase of Big Machine, which also owns the rights to music by country star Rascal Flatts.

Carlyle first invested in Ithaca Holdings in 2017, and according to a June story from The Wall Street Journal, Ithaca is now valued at $800 million.

Ithaca went from $800 million to at least $1.35 billion, the $1.05 billion from the sale of the company to Hybe and the $300 million from selling the Swift catalog to Shamrock Holdings.  That's a two year return of 68.75%.  Carlyle's return on equity is likely much greater, thanks to leverage.  Another PEU payday!